While it seems strange Caviar would seek to be acquired so soon after raising funding, it’s possible that the competitive environment is just too much for it to handle, and maybe it would do better to be part of a larger company.
In any other environment, a failing or non-competitive company would be purchased for the value of its net assets. In this situation, that would be at most $20 million and likely for less than $10 million. It's silly stuff like this that convinces everyone outside of the SV echo chamber that the tech market is looking at another bubble.
I don't know anything about this deal, but as far as I know Caviar has been growing leaps and bound, with many new cities launched recently very successfully in terms of order volume, etc...
Caviar's growth potential is really strong, (and they are not burning a lot of cash at all - they were operating profitably in SF for almost a year): Grubhub is stuck at the low end of the market, and there is a real opportunity to be a true partner at the high end (which they are doing).
Disclaimer: I am a small investor in Caviar and shared an office with them for 4 months
It's disappointing that a perspective with information from an insider (investor) is down-voted on Hacker News. It's such inside perspectives and unique insight that make Hacker News special.
I'm assuming this acquisition (if it does occur) would be paid for mostly in Square stock. $100 million cash vs $100 million in Square stock have two different values, depending on how you feel about Square's current valuation and future prospects.
Remember when Instagram was bought by Facebook right before its IPO, then FB proceeded to tank post IPO? Things have recovered since then of course, but that sort of thing can always happen.
It's not a bubble when one VC backed company buys another for more than the value of their assets alone. That's how business is done. You can't expect Caviar's investors to sign off on an acquisition where they get no return at all.
"OOh, we raised $13 million, and we say it's valued at $80 million dollars (even though the assets/product/tech is nowhere never $80 million and we're losing money everyday)! So you're just buying it at a 25% premium, Square! CHEAP! CHEAP!" -investors at Caviar
"Hey guys, stocks is virtual money! I mean.. who's gonna repay the public when they buy our stock! Let's buy Caviar for $100 million stock! It's like we paid nothing!" - executives at Square
It's silly unless you know the numbers involved (revenues, growth, etc..). As far as I know nobody knows these numbers today (I know the ones from 6 months ago and they were better than most startups hope to ever get to).
Honestly, I thought Square was kind of broke. Most of my contact with Square is in small cafes and restaurants, making this pivot kind of bizarre. Why would any food service company sign up for payment services with a company that's also competing with them? Stripe should be all over that angle.
I've also seen a long-term upward adoption trend for Square in small businesses in my area. Some of these are at their first-time accepting credit cards, especially at local farmer's markets where Square's adoption has increased from a fringe payments player to near ubiquity (>90%) over the past three to four years. It's also been interesting to see an increasing trend in businesses switching to Square from traditional wired or wireless credit card systems.
Every time I hear that Square isn't doing well financially, my heart sinks a bit. From my experience, it seems that they're nailing an underserved market and greatly improving the experience for these small businesses and their customers.
Go.com, Lycos, AltaVista, Excite, Yahoo!, Dogpile, Ask.com, Yandex and many other search engines existed before Google entered. Most were wildly profitable.
Sometimes it helps to read the articles you link to. None of them show that "Most were wildly profitable." In fact, those articles mention that search engines before google struggled to make money.
That's a good point, but Square and Stripe aren't really competitors, so I'm not sure what the opportunity is for Stripe (unless you are suggesting they launch a card reader).
I'm always curious as to who profits from a leak like this. is there ever any interest from the company or acquiring party to leak this deal to the press before it closes?
It's happened with Twitch and now Caviar, so i've started thinking through reasons why it'd be in either party's interest to leak the deal. Any thoughts? Or should I take my tin-foil hat off?
On the acquiring party's side, isn't it then obvious what side is responsible for leaking the deal? I'd imagine this move breaches some level of trust and risks the entirety of the deal.
To me, when I hear news like this before the proverbial money is in the bank I actually think the deal is likely to fall through
Interesting that Square is looking for acquisitions in the industry. Payment processing by itself always lacked tangible lock in.
From another article:
> TechCrunch understands from a reliable source that Square was a “serious bidder” against Google for Appetas, a restaurant website building platform Google just acquired.
Exactly. Square is trying to build up a collection of services to offer local businesses, especially restaurants, of which payments is just one. Google has been playing in the same game, with the main aim of selling ads to local small businesses, but hasn't really moved fast enough in pushing payments.
Caviar is the only reason to order food in Manhattan. Time after time, they have done the right thing by me. They are on the top of the charts with customer service and relationship management. They could seminar school 99% of businesses out there on how to do right by people. And, this says nothing about the quality of the restaurants they provide. Truly world class, and I hope the GPs make a killing on their equity stake. ;p
Short question with regard to their marketing. How did they start? How do they do marketing? I am just wondering how they did that good job in such competitive landscape. Thanks. Best regards.
It is just another asset of the company being acquired, like a desk or a chair. As part of the acquire agreement, they may be required to pay down existing debt with any cash on hand or something too? Just guessing.
In any other environment, a failing or non-competitive company would be purchased for the value of its net assets. In this situation, that would be at most $20 million and likely for less than $10 million. It's silly stuff like this that convinces everyone outside of the SV echo chamber that the tech market is looking at another bubble.